US Editor Of The Economist: “Paper Dollar” And “Paper Euro” Will “Debase” In A “Big Way”
Matthew Bishop, the US Editor of The Economist, has been interviewed by the Wall Street Journal TV about gold and why “people have lost faith in the 20th century religion of government backed fiat money." He says that he has become an agnostic or an atheist with regard to his belief in government-backed money as he fears that governments are in a position whereby they are going to debase currencies such as the “paper dollar and “paper euro” “in a big way.” Gold becomes one of the “alternative religions” in that environment. History shows that a deleveraging downturn takes a long time and can take 7 or 8 years. Inflationary pressures are building and will be seen in the second half of the cycle, according to Bishop. Bishop says he would put some of his money into gold but is prohibited from this due to the investment policies of The Economist. He advocates owning gold as a “portfolio of money” and diversification and advocates having 5% to 10% of one’s money in gold. The Economist magazine has a strong Keynesian bias and has been one of the most anti-gold publications in the world with many simplistic, unbalanced and ill-informed articles. The publication has suggested on many occasions since 2008 that gold is a bubble. Clients of GoldCore have told us that they were prompted to sell their gold bullion as long ago as 2009 after reading such articles in The Economist.Why the Middle Class Is Doomed
The Federal government is supporting its dependents and its crony-capitalist Elites with borrowed money: $1.5 trillion every year, fully 40% of the Federal budget. It is in effect filling the gap between exploding costs and declining income, just like the middle class did until they ran out of collateral to leverage. The dwindling middle class, now at best perhaps 25% of the workforce, has been reduced to tax donkeys supporting those above and below who are dependent on Federal largesse. Fisher found that this cycle ends in transformational political upheaval. No wonder; even as the class paying most of the taxes shrinks and is pressured by higher costs, the class of dependents expands as the economy deteriorates and the super-wealthy Power Elites continue to control the levers of Central State power.
Today’s Items:
The Argentian government has taken over
oil and gas producer YPF; and in doing so, the shareholders have
effectively lost everything. Yes folks, this concept will spread to
other area outside of oil, like gold, silver and other commodities. In
short, if you cannot put your hands on it, then you don’t own it.
Jamie Dimon has transformed areas in JP Morgan in the past five years, increasing the size and risk of its speculative bets.
Some of these bets are now so large that JP Morgan probably can’t unwind them without losing money or roiling financial markets. Well, that is because they have been doing the bidding of their number one, and not-so-secret, client – The Federal Reserve.
Some of these bets are now so large that JP Morgan probably can’t unwind them without losing money or roiling financial markets. Well, that is because they have been doing the bidding of their number one, and not-so-secret, client – The Federal Reserve.
U.N. Secretary-General Looney Mooney – no
offense to Canada, wants the Syrian government, that is aided by the
Russians, to guarantee U.N. rapist, err… observers full freedom of
movement to monitor the country’s tenuous cease-fire. Sounds like a
recipe for more proctored instability by the U.S. government.
The governor of the State of Utah, while
in a gun shop, announced that gold and silver will now be used as sound
money in the State of Utah. In addition, it allows people to pay with
silver dollars for the actual Silver worth, than for just the monetary
value on the coin. This is just the beginning folks as the the dollar
continues to drop like a rock; therefore, keep stacking.
Like rats fleeing a sinking ship, banker
CEO’s, CFO’s and senior officers around the world are continuing to get
the hell out of Dodge. So, where are they going and by any chance are
they in paper?
(ed note) A great place to start is by visiting our sponsors.
Better to be a year too early... then one second too late...
Five Fundamental Flaws In Dip-Buying Euphoria
With
S&P futures, and most notably financials, staging the second
overnight opening surge in a row, we thought it perhaps worth reflecting
on five quite concerning fundamental reasons why dip-buyers (as
anesthetized as they have become thanks to central bank 'protection')
could face a tougher time. As Mike Wilson of Morgan Stanley notes, for
those looking for a cause or explanation of recent weakness, feel free
to blame it on the more hawkish Fed minutes, Draghi’s comments that it
was now “up to governments to do the right thing” or the soft US payroll
numbers. After such an uninterrupted run, some kind of correction was
inevitable and simply a matter of timing. The bigger question to
resolve is whether this pull back will look like what we experienced in
2010 and 2011 or end up being more muted. Obviously, the key variables
for this analysis remain growth and liquidity expectations. The 'payback' that we have been warned about for such an unseasonably warm winter is upon us (as macro data surprises increasingly to the downside) and that is the first flaw in BTFD logic. Wilson goes on to point out that NFIB small business hiring intentions have dropped precipitously, GDP growth is weak but earnings growth is now catching up (down) to that weakness and for many stocks is rapidly falling towards zero, we remain in a 'liquidity lull' as central banks stand on the sidelines and reflect, and perhaps most worrisome is the rapid deterioration in the Bloomberg financial conditions index. All-in-all, these sum up to suggest a greater-than-5% correction is more than likely.Goldman Beats On Top And Bottom Line As Secular Business Decline Continues, Comp Slides
Goldman's earnings are out and at revenues of $9.95 billion and EPS of $3.92 (compared to expectations of $9.41 billion and EPS $3.55), coupled with an increase in the dividend from $0.35 to $0.46 per share (exp. $0.40), the company appears to have done solidly better than expected. And yet, not all was sunny skies. As expected, declining secular markets continue to impact the company, whose ongoing secular decline is shown on the chart below. The reason - volume, which continues to slide for reasons already discussed extensively. To wit: "Net revenues in Investment Banking were $1.15 billion, 9% lower than the first quarter of 2011 and 35% higher than the fourth quarter of 2011....Net revenues in equity underwriting were significantly lower than the first quarter of 2011, primarily reflecting a decline in industry-wide activity. Net revenues in debt underwriting were lower compared with a strong first quarter of 2011, primarily reflecting a decline in leveraged finance activity." Thank god for CDS (aka derivatives): "Net revenues in Fixed Income, Currency and Commodities Client Execution were $3.46 billion, 20% lower than a solid first quarter of 2011, as higher net revenues in interest rate products were more than offset by lower net revenues in the other major businesses....Net revenues in Equities were $2.25 billion, 3% lower than the first quarter of 2011, as higher net revenues in equities client execution, reflecting an increase in derivatives, were more than offset by lower commissions and fees, consistent with lower market volumes." DVA loss for Q1 was $225 million. Finally, on the revenue side, hurray for Goldman Prop, aka the Asymmetric Information Initiative, aka "Investing and Lending" which generated $1.911 billion in revenues in Q1, the highest since Q1 2011. Still, the 22% top-line decline from Q1 2010 appears relentless. As for the only thing that matters to Goldman employees, implied full year comp dropped to $350,864 per average employee, the lowest in two years, even as the firm cut headcount from 33,300 to 32,400 in the quarter, the lowest number of employees since Q4 2009.
Tricks Of The Trade
Admin at Jim Rogers Blog - 44 minutes ago
"When everybody goes to the same side of the boat, it's logical to take the
opposite side of the trade." - *in Money Morning*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
D-Wave Declines in Gold Test Patience
Eric De Groot at Eric De Groot - 2 hours ago
D-wave hooks form under a backdrop of fear and terminate when WA crosses
above 50 percentile. Chart: London PM Fixed Gold and GLD (ETF) Total Assets
WA Stochastic ------------------------------------- Insights is intended to
reflect excellence in effort and content. Donations will help maintain this
goal and defray the operational costs. Paypal, a leading provider of
secure...
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Extremes, Divergences, and Art of Independent Thinking
Eric De Groot at Eric De Groot - 2 hours ago
Extreme readings (green circles) followed by positive divergences in
breadth and/trend energy relative to price generate bullish signals. If
the financial media, also known as the dog and pony show, has been
interviewing long-term bears every thirty minutes, it's usually time to
buy. Chart: NYSE Composite Average -------------------------------------
Insights is...
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Gold falls on euro jitters, silver stocks soar
Eric De Groot at Eric De Groot - 2 hours ago
Everyone is a trader, but few are good at it. Bomb the headlines will gold
negativity and use any weakness to reduce that heavy short position as fast
as possible. Headline: Gold falls on euro jitters, silver stocks soar "As
long as the general impression of economic stability is positive, money
managers will tend to move away from the yellow metal and towards the paper
investments...
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content, and more! ]]
SEC Charges OptionsXpress with Naked Short Selling Scam
Repsol CDS Surge Continues
By now everyone is aware of Argentina's disturbing plan to
nationalize YPF over the protests of Spain, and soon EU. And as we noted
yesterday, the equity value of YPF is essentially a doughnut as BofA stated, if somewhat more correct politically. YPF continues to be halted on the NYSE as
per a T2 halt (aka "The news has begun the dissemination process
through a Regulation FD compliant method(s).") and there is little
availability for price discovery at the first derivative level. However,
where discovery is ample is at the second degree, namely Spanish
Repsol-YPF which is a majority owner of YPF, whose CDS continue soaring,
and hit a whopping 391 earlier today, well over 100 bps compared to
the Friday closing spread. For a massive energy production company this
is a big move and we can only hope its Spanish bank shareholders are
well insulated from mark to market losses, although somehow we doubt
it.
Gold Sliding On Central Banker Script - First India Cuts Rates, Next Tries To Talk Down Gold
Gold has moved rather rapidly in the past few minutes and many are
scrathcing their heads just why this is happening? The reason is simple:
central planning script 101, page 1. As we noted earlier, the RBI did
a surprising overnight rate cut from 8.5% to 8.0%, in other words it
has just joined the global central planning cartel in attempting to
stimulate the economy nominally, even as
inflationary packets still abound across the land (see China). Yet what
does that mean from a modern monetarist standpoint: why crush gold as
an alterantive to the local paper currency of course. Sure enough:
- INDIA ECONOMY SECRETARY: EXPECT TO LOWER GOLD CONSUMPTION IN ECONOMY - DJ
And there you have it: because the last thing India needs is a surge
in gold buying now that it too has joined the global reliquification
parade. That said, we are curious in what parallel universe will
liquidity easing result in less demand for hard assets. Aks the algos
who are selling on nothing but headlines.
The Only Fools Bigger Than Those That Are Playing Are Those That Are Watching
Today's
futures pop on short-term bill auctions in Europe (that remain in a
world of their own and should not be considered as anything but
emergent in nature rather than indicative of investor demand) and ad hoc
data in Germany that disconnects from any sense of reality in true
economic environs only confirms Morgan Stanley's Mike Wilson's
perspective that there still isn't much fear out there.
We remain in the midst of a longer-term deleveraging cycle, of that
there can be little argument in reality (unless of course exponential
trends are natural) and as Wilson points out we are likely to remain in
the wide trading range that we have been in the past two years -
however, many investors appear to disagree (not the least of which the
effusively exuberant 'Ace' Greenberg this morning). Few expect a
correction more than 5-10%, Buy-lists are already in great demand, and
put-call ratios remain muted. "Of course, this is what happens when an animal
becomes conditioned to buy the dip in a pavlovian manner over years
during which they have remain unscathed by some of the biggest financial
risks we have ever witnessed. As the saying goes, “the only fools bigger than those that are playing are those that are watching.” Of course, having
some Fed official speaking every other day to remind us they are there
to save the day in the event of trouble helps perpetuate this
unnatural one way market." However, his bottom line is that
slowing/disappointing economic data, zero percent earnings growth and a
liquidity lull sounds like a recipe for more than a 5% correction.WTI Surges Over $105 Ahead Of Margin-Hiker-In-Chief Speech
The Brent-WTI spread has compressed under $14 for the first time in 10 weeks
but it is being led by the margin-hiker-in-chief's most visible
indication of dastardly speculation - the WTI contract as Brent remains
close to unchanged. Perhaps, just perhaps, there really is little to no
speculation (remember there is a speculative seller for every
speculative buyer no matter how many speculator-surveilled market
participants there are). As WTI breaks $105 for the first time in almost three weeks, we suppose this is not what Obama was hoping for and just as we pointed out earlier - just as every failed attempt at central planning, all Obama will achieve is another spike in crude prices - an hour later - we are proved right.Weather Blamed For Industrial Production Miss
Industrial production is the latest economic miss, expected to rise from a previously unchanged print, to 0.3%, instead posting another flat print. The reason: blame it on the weather. From the Fed: "Industrial production was unchanged in March for a second month but rose at an annual rate of 5.4 percent in the first quarter of 2012. Manufacturing output declined 0.2 percent in March but jumped 10.4 percent at an annual rate in the first quarter. The gain in manufacturing output in the first quarter was broadly based: Even excluding motor vehicles and parts, which jumped at an annual rate of nearly 40 percent, manufacturing output moved up at an annual rate of 8.3 percent and output for all but a few major industries increased 5 percent or more. In March, production at mines rose 0.2 percent and the output of utilities gained 1.5 percent. For the quarter, however, the output of utilities dropped at an annual rate of 13.8 percent, largely as a result of unseasonably warm temperatures over the past several months, while the output of mining fell 5.4 percent. At 96.6 percent of its 2007 average, total industrial production for March was 3.8 percent above its year-earlier level. The rate of capacity utilization for total industry edged down to 78.6 percent, a rate 2.1 percentage points above its level from a year earlier but 1.7 percentage points below its long-run (1972--2011) average." In other words, blaming both cold and hot weather is now a solid excuse for anything that does not go according to the best laid plans of central bankers. Got it.
Housing Starts Slide In Latest "Housing Recovery" Disappointment; Permits Rise On Expectations Of Rental Surge
Today's housing starts number is merely the latest datapoint confirms the housing bottom callers will be once again early. In March, housing starts, expected to print at 705K (which is crawling along the bottom as is, so it is all mostly noise anyway, but the algos care), came at a disappointing 654K, the lowest since October 2011, and a third consecutive decline since January. Want proof that the record warm Q1 pulled demand forward? This is it. As the chart below shows, the all important single-unit housing starts have not budged at all since June 2009. So was there any good news in today's data? Well, housing permits, which means not even $1 dollar has been invested in actually 'building' a home soared to 747K, from 715K in February, and well above expectations of 710K - the highest since September 2008. That a permit is largley meaningless if unaccompanied by a start, not to mention an actual completion goes without saying. However, what is notable is that even the permit dat was skewed: single unit structures came at 462K, lower than February's 479K. Where the ramp was in 5 units or more, aka multi-apartment units, aka straight to rental. It appears that now everyone is piggybacking on the administartion's REO-to-rent plan, and instead of buying "home to buy", all future constrcution will be apartments to rent. Which is great: since rents have been going up, builders are already redirecting their attention to the one segment in the market that is not moribund. As a result, in a few short months expect a glut of rental properties, which will kill even the incipient possibility of a recovery, as the supply drowns any latent demand, as more and more households shifts from owner to renter mentality.
Oil Speculator Crackdown Cometh: Central Planner In Chief Announces Self-Promotion To Margin Hiker In Chief At 11:10AM
When it comes to evil, evil speculators driving stocks higher on endless gobs of cheap zero-cost liquidity, one will hear nary a peep out of the administration: after all: wealth effect or bust. However, when someone hears oil speculators, run and hife. Indeed, now that Obama's uber-central planning mandate has proven completely powerless to redirect the flow of zero-cost money from acquiring real, as opposed to paper-based, assets (read crude), the Teleprompter in Chief will have a sit down with the nation at 11:10 am and in the latest sermon from the White House mound, will "confront" oil speculators once and for all. His plan: why encourage margin hikes of course - the same principle that crushed the spine of the gold and silver spike in 2011. Unfortunately, unlike gold and silver, whose trading is still dominated by the Comex, energy has numerous alternative venues, such as the ICE, and increasing exchanges in China, which also happens to be the marginal demand setter with 3 consecutive months of near record imports. Which is why we are 100% confident that just like every failed attempt at central planning, all Obama will achieve is another spike in crude prices, just in time for the next global reliquification cycle, just in time for 2012's debt ceiling scandal, and just in time for the reelection.Frontrunning: April 17
- This is just hilarious on so many levels: Japan Will Provide $60 Billion to Expand IMF’s Resources (Bloomberg) - just don't look at Fukushima, don't look at the zero nuclear plants working, don't look at the recent trade deficit, and certainly don't look at the Y1 quadrillion in debt...
- US Senate vote blocks ‘Buffett rule’ (FT)
- Reserve Bank of Australia awaiting new data before considering rate move (Herald Sun)
- Merkel Offers Spain No Respite as Debt Cuts Seen As Key (Bloomberg)
- RBI cuts repo rate by 50 bps; sees little room for more (Reuters)
- China allows banks to short sell dollars (Reuters)
- Central bankers snub euro assets (FT)
- Shanghai Econ Weakening’ Mayor Vows to Pop Housing Bubble (Forbes)
- Wen's visit to boost China-Europe ties (China Daily)
- Madrid threatens to intervene in regions (FT)
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